India May Defer Fines on $1 Billion Solar Thermal Plants

By Natalie Obiko Pearson -
May 8, 2013

India’s Ministry of New and Renewable
Energy is seeking to defer penalties on about $1 billion of
solar-thermal power projects that are delayed by a lack of
water, financing difficulties and equipment shortages.

Seven projects totaling 470 megawatts in capacity by
companies including by Godawari Power and Ispat Ltd., Reliance
Power Ltd. (RPWR) and Lanco Infratech Ltd. (LANCI) that were to be ready by
May, aren’t operational, Tarun Kapoor, joint secretary at the
ministry, said in a phone interview from New Delhi. The projects
could potentially forfeit about 2.3 billion rupees ($42.5
million) in performance guarantees, according to rules when the
contracts were awarded in December 2010.

“There’s obviously a problem since all are delayed,”
Kapoor said. “This is the first time solar-thermal projects are
being built in India and we want them to succeed.” An expert
committee at the ministry is recommending a 10-month extension
for the projects, he said.

The delays are another blow to the solar-thermal industry
suffering from high costs. France’s Areva SA (AREVA) had to scrap plans
for a A$1 billion complex in Australia in November after failing
to get financing. In contrast, a competing technology, solar
photovoltaic, has benefited from a 61 percent plunge in panel
costs over the past two years, according to data compiled by
Bloomberg.

Solar-thermal plants, which focus sunlight on liquids to
produce steam and drive turbines, are valued for their ability
to store energy and produce power around the clock. Photovoltaic
panels convert sunlight directly into electricity and need
batteries for storage.

Godawari Ahead

A 50-megawatt project owned by Godawari Power is the
closest to completion, Kapoor said. It’s undergoing final
testing and should be finished by early June. Godawari Power’s
Managing Director B.L. Agrawal wasn’t immediately available for
comment.

A 100-megawatt project owned by billionaire Anil Ambani’s
Reliance Power is about six months behind schedule, Kapoor said.
A delay in laying a water pipeline by Rajasthan state
authorities to the site stalled the plant, according to a letter
sent by the Rajasthan government to Renewable Energy Minister
Farooq Abdullah in March. Reliance Power spokesman Nagraj Rao
declined to comment.

Lanco Infratech spokeswoman Deepkamal Kaur didn’t respond
to an e-mail seeking confirmation of delays at its 100-megawatt
plant. The company is also the contractor for KVK Energy &
Infrastructure Pvt.’s 100-megawatt solar-thermal project.

The Indian projects, ranging from 20 megawatts to 100
megawatts in capacity, are using turbines from suppliers
including Siemens AG, General Electric Co. and Areva.

India has built 1,686 megawatts of solar capacity and
expects to award an additional 500 megawatts of solar-thermal
capacity by 2017, Kapoor said. The outcome of the plants under
construction could affect those plans, he said.